Question: Spears & Cantrell announced inventory had been overstated by $ 30 at the end of its second quarter. The error wasnt discovered and corrected in

Spears & Cantrell announced inventory had been overstated by $ 30 at the end of its second quarter. The error wasn€™t discovered and corrected in the company€™s periodic inventory system until after the end of the third quarter. The following table shows the amounts that were originally reported by the company.

Required:
1. Restate the income statements to reflect the correct amounts, after fixing the inventory error.
2. Compute the gross profit percentage for each quarter (a) before the correction and (b) after the correction, rounding to the nearest percentage. Do the results lend confidence to your corrected amounts? Explain.

Net Sales Cost of Goods Sold Gross Profit 01 $3.000 2100 900 03 $3,750 2655 $3,600 2490 1.110 1.095

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Req 1 Spears Cantrell Company Income Statements Corrected Q1 Q2 Q3 Net Sales 3000 3600 3750 Cost ... View full answer

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